Restat is a smaller PBM with a transparent pass-through pricing model. It was one of the first PBMs to market a preferred pharmacy model (Align) to self-insured employers. At launch, the preferred network included Walmart and Target, along with many supermarkets, regional chains, and the independent pharmacies in McKesson’s Health Mart franchise. I last wrote about Restat’s model in January 2011’s Pharmacy Profits in Preferred Networks with PBM Transparency.

Restat will add about $650 million in annual drug spend to Catamaran. Catamaran expects to close the transaction in the fourth quarter, and take about 18 months to integrate the business.

SXC Health Solutions, the predecessor to Catamaran, has been rolling up the companies for which it provides the back-end technology platform. (See The SXC-Catalyst Merger: Initial Thoughts On the Deal.) Restat, which is reportedly on a McKesson platform, is the first non-customer PBM acquisition. Looks like its full steam ahead for Catamaran.

While this transaction didn’t get much attention, it will ultimately have a much bigger industry impact. TPG has A LOT of capital and clearly sees an opportunity to consolidate the PBM industry.

With TPG’s funding, EnvisionRx also becomes the most likely acquirer of independent specialty pharmacies, especially very large ones that are looking for a strategic exit.

According to Wikipedia: “A shark feeding frenzy occurs when a number of sharks fight for the same prey.” Since the big PBMs are temporarily on the M&A sidelines, expect bidding wars for independent PBMs and specialty pharmacies.

Adam,How can bargaining power exist when there are only minimal PBM's left providing room for new stakeholders with fresher ideas, lower results needed and Affordable Healthcare about to supposedly happen? The same principle you propose just proved its worth with Walgreens buying out Drug Warehouse and look what happened ... what was supposed to be a coux ended up being a rebirth of independent pharmacies due to longer wait times, unemployed pharmacists and decreased service from the whole transaction.

We'll see what happens. In the meantime, I've got a great business plan for a PBM, oh, shoot, it just sold. I'll get you next time.

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